A combination of de-stocking, a reduction in the average retail spend per head, and bankruptcies among customers led to the fall. Bad debts were a particular, but unquantified, problem.
In the year to 30 October Watson made pounds 10.3m before tax against pounds 11.8m in 1991.
Most of Watson's trade comes as a wholesaler to independents trading under the Spar and VG banners. Watson also has its own Alldays retail chain, cash and carry outlets, and supplies food to caterers.
The three smaller operations all performed well. Operating profit from cash and carry was lifted from pounds 2.7m to pounds 3.1m. Profit from catering supply was up to pounds 738,000 from pounds 690,000.
Profit from wholesale and retail was down 20 per cent at pounds 6.8m. The company does not split retailing from wholesaling but David Bremner, the managing director, said wholesaling was responsible for most of the shortfall recorded for that part of the group.
Watson is slimlining the wholesale operation to tackle the problem, and has made 50 of the 3,500- strong workforce redundant. The job losses cost the company an exceptional pounds 470,000.
Benefits of the cost-cutting programme are already coming through, however, and Mr Bremner said sales in the first quarter of the new financial year were substantially ahead.
Earnings per share fell to 21.7p against 25.4p, but the company has raised dividends. The 9.1p final payment made a total for the year of 13.3p, up from 12.8p.
The shares rose 1p to 285p, even though the market had to swallow a placing of 16 per cent of the stock at 257p, from Ron Jacques, who joined the board of Watson after selling his Amalgamated Foods business in 1991.Reuse content